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Wholesale service levels critical to industry - Martin Sawer

Xrayser’s comments on wholesaling last week (C&D 25 th June, p15) represented a very welcome contribution to the debate around the condition of the supply chain. Unfortunately, the author’s hope that the BAPW chairman’s complaints about the critical condition of wholesaling are exaggerated is misplaced. Stock shortages have never been so bad.

The customers of pharmaceutical wholesalers are used to the highest levels of satisfaction – service is rightly expected to be at the highest levels. This ensures that patients get the medicines they need, when they need them, and that pharmacists can get on with their jobs without worrying about where the next delivery is coming from.

The comparison David Coles, our chairman, makes is with the Post Office. Bosses there get excited about service levels which hit low 90% levels, yet last year lost 16m pieces of mail. Imagine that transposed onto the pharmaceutical wholesaling industry – with a well above inflation price increase slapped on for good measure. Neither wholesaling nor our customers would maintain their integrity for very long.

Yet wholesaling and pharmacy is being potentially threatened by exactly the same issue –an inability to meet patient demand and customer expectations which could undermine confidence in the entire supply chain. The BAPW has been concerned about stock shortages for some time and has worked closely with the Department of Health and manufacturers wherever possible to fight the fires that have sprung up across the supply chain – none of their making.

But this is not a sustainable state of affairs. As Xrayser points out, wholesalers are being squeezed left, right and centre – generics, PPRS, new discount structures and unilateral manufacturers’ pricing schemes – and this limits the investment wholesalers can make in core services, let alone the extras customers have got used to. The point of our chairman’s conference address wasn’t to be alarmist. Instead the BAPW is trying to make customers and suppliers aware that through no fault of our own our high service levels are under threat– and by implication, the businesses of our customers. We don’t predict death by a thousand cuts just yet, but wholesalers are certainly feeling bruised by developments out of their hands.